7/08/2010 @ 12:38PM

The Online Travel Industry Worries About Google

Google’s $700 million acquisition of ITA Software, announced on July 1, has left many wondering how ITA’s clients are going to survive. ITA, based in Boston, provides software that handles information about airline flights and fares and times, and it’s used by airlines, travel agencies and websites like Orbitz, Kayak and Bing. Will Google blow them all out of the sky?

Kayak, based in Norwalk, Conn., is a travel meta-search engine that gathers flight and fare information and then directs its users to online travel agencies and airline websites to make their ticket purchases. Contacted by Forbes, Kayak’s chief marketing officer, Robert Birge, quickly pointed out that ITA’s QPX software is not the only data source powering his company’s website. He told us, “Our focus has always been to build the best travel application in the world. We will continue to lead innovation against that goal as we’ve done for the past six years, and we’re confident in our ability to compete effectively in this market.”

It has been reported that Kayak bid to purchase ITA itself but was beaten out by Google. Birge made it clear that Kayak was looking to expand its sources of data even before Google made the purchase. “We have been testing and exploring additional sources well before this transpired, and we will continue to do that,” he said. “In the meantime, we’ve received assurances that our long-term agreement with ITA will be honored.”

Tom Parsons, an online travel industry expert who owns the discount website Bestfares.com, says the biggest danger isn’t to search engines like Kayak but the airlines themselves. “What it really comes down to is that Google could have a very good deal,” he said. “You have benefits of booking on sites like the new Google or Kayak because they give you a shot at more than one airline. The individual airlines may have to juice up the pot. It’s a battle.”

Parsons also says that Google should keep a close eye on ITA’s competitors, which include companies like Amadeus, Sabre and Expedia. They may be more inspired than ever to compete in a growing marketplace. “I think there are a lot of people catching up with what ITA is doing,” he said.

So what exactly will Google do with ITA? The company has made it clear that it will not be selling tickets, but not much else is known. Google’s chief executive officer, Eric Schmidt, suggests that he also may not want to emulate the travel search engines already out there. “Part of the goal of the merger is that it’d have to be something quite different than what’s available today,” Schmidt said during a July 1 conference call announcing the deal.

Such questions are likely to remain unanswered for some time. TheNew York Times reported on July 6 that before the deal can be finalized it will be investigated by either the Federal Trade Commission or the Justice Department to determine if it violates antitrust laws.